No UK recession fails to lift markets and Barclays reportedly in UK regulator’s firing line again

“News that the UK has managed to avoid being in a technical recession gave a small lift to the pound, putting it briefly at $1.2130, but still some way off the $1.2434 level seen in January. Zero GDP growth is hardly a reason to celebrate, and markets are certainly not jumping for joy,” says Russ Mould, investment director at AJ Bell.

“The FTSE 100 slipped back 0.3% as a stronger pound is bad for the large number of companies which earn in US dollars but whose share prices are sterling-denominated. Miners certainly fall under this category and the broader basic material sector was down in the dumps on Friday.

“The FTSE 250 is often viewed as a better proxy on the UK economy, although it too has plenty of foreign earners. The ‘no recession’ news wasn’t enough to lift the FTSE 250, with the mid-cap index falling by 0.5%. Here, the culprits included ITV which is a play on advertising demand – something that’s likely to be muted if there is no economic growth.”

Barclays

“The banking sector is no stranger to upsetting the regulators and Barclays is once again in the firing line, according to reports.

“Talk of a probe into its anti-money laundering systems would be the latest blunder for the bank following issues around unauthorised sales of structured financial products, mis-sold timeshare loans and staff using messaging systems such as WhatsApp to talk business and not keeping records, among others.

“The market doesn’t seem too worried with Barclays’ shares only down 0.8%, perhaps implying that regulatory mistakes are part of the territory with this sector. In these situations, if a bank is found guilty, they get slapped on the wrist by the regulator, they pay a fine and move on. If a big enough carrot is dangled in front of investors in the form of generous dividends, those owning the shares don’t seem too bothered about poor business practices which doesn’t seem right.”

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